Financial Assistance Available for Small Businesses Affected by COVID-19 | Practicing DPMs | APMA
Financial Assistance Available for Small Businesses Affected by COVID-19

January 12 Update—The SBA and Treasury released interim final rules, an updated form for First Draw PPP loans and a new form for Second Draw PPP loans, and new summaries, and will re-open the PPP loans for application, starting on January 11, through March 31, 2021. 

December 22, 2020 UpdateCongress passes a $900 billion COVID relief bill, which includes updates and clarifications to the PPP program, among other provisions. Read the full summary here, and go to the PPP section below for PPP-specific updates.

October 16, 2020 UpdateThe SBA and Treasury have issued new guidance regarding PPP loan holders' changes in ownership status and eased full forgiveness requirements for smaller loans

August 24, 2020 UpdateThe SBA has opened the lender portal for loan PPP loan forgiveness applications. Check if your bank is accepting your application today. Additionally, the IRS has released a new tax guidance update stating that if a recipient of PPP uses those PPP funds towards expenses that would be otherwise deductible, those expenses will no longer be deductible. Talk to your accountant to make sure that you are in compliance.

July 2, 2020 UpdateCongress Extends PPP Application Loan Deadline to August 8, 2020.

June 4, 2020 UpdateCongress Passes PPP Flexibility Act.

May 18, 2020 Update—SBA Releases Loan Forgiveness Application for the Paycheck Protection Program.

APMA is providing small business resources that may be available to eligible podiatric offices, and we encourage you to check back often as we continue to update this page as new information becomes available in the coming days and weeks. 

In response to the COVID-19 pandemic, the CARES ACT expanded loan options for small businesses, and we expect podiatric offices to take advantage of one or both loan options. Detailed information about both options is available on this page.

  • Paycheck Protection Program (PPP)–Purpose is to help small businesses with their payroll and related costs for an eight-week period. Loan forgiveness available for small businesses that maintain their workforce. 
  • Economic Injury Disasters Loan and Loan Advance (EIDL)–Program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Small businesses can access a $10,000 loan advance that is not repaid.

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Paycheck Protection Program
Economic Injury Disasters Loan and Loan Advance
Marcum, LLP Articles for Podiatric Practices
Additional Assistance and Resources
Webinar: How Your Practice Can Survive COVID-19
Podcast: Applying for SBA Loans

Paycheck Protection Program (PPP) - Reopened on January 11, 2021 for First Draw Loans (FDLs) and Second Draw Loans (SDLs) to be available January 13, 2021

As a part of the December 2020 $900 billion COVID relief package, Congress provided updates and clarifications to the PPP loans that were previously awarded as well as announced a second round of loans that would be made available to smaller, harder-hit businesses. With regard to all PPP loans, Congress did the following:

  • clarified the tax treatment for PPP loans, specifically that gross income doesn’t include any forgiven portion of the PPP loan and deductions are allowed for otherwise deductible business expenses when paid using PPP funds that are forgiven;
  • removed the previous requirement to deduct the EIDL Advance from the total PPP forgivable amount;
  • expanded and clarified eligible non-payroll expenses, made effective to the date of the CARES Act;
  • extended the covered period for all PPP loans through March 31, 2021, applying to loans made before, on, or after the date of enactment, including the forgiveness of such loan. 
  • increased the ability for PPP borrowers to request an increase in loan amount due to updated regulations, allowing borrowers who returned all or part of their PPP loan to reapply for the maximum amount applicable, so long as they have not already received forgiveness; and
  • directs a simplified forgiveness application to be provided for loans of $150,000 or less.

FDL and SDL PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (capped at $100,000 per employee annualized), in 2019, 2020, or the year prior to the loan. The maximum loan amount is $10 million for first-time borrowers and $2 million for second-time PPP borrowers. Both first and second draw loans are forgivable if the funds are used on the following eligible costs:

  • payroll
  • rent
  • covered mortgage interest
  • utilities
  • covered worker protection and facility modification expenditures
  • covered property damage costs
  • covered payments to suppliers and payments for business software or cloud computing services that facilitate business operations
  • product or service delivery
  • back-office functions, including accounting

To be eligible for full loan forgiveness, PPP borrowers must spend no less than 60 percent of the funds on payroll over a covered period of their choice between eight and 24 weeks.

First Draw Loans (FDLs) - Up to $10 Million

Application: Form 2483—Paycheck Protection Program Borrower Application Form (first draw borrowers)

Eligible entities of 500 employees or fewer include among others:

  • Businesses; 
  • self-employed individuals; 
  • sole proprietors; and 
  • independent contractors. 

Reapplying and Loan Increases: Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1) reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or (2) under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.

Second Draw Loans (SDLs) - Up to $2 Million

Application: Form 2483-SD—PPP Second Draw Borrower Application Form (second draw borrowers)

This loan of up to $2 million is available to smaller (300 employees or less) that can demonstrate at least a 25 percent reduction in the first, second, or third quarter relative to the same 2019 quarter. If a business was not in operation in 2019, the Act provides applicable timelines for demonstrating a loss. 

Eligible entities of 300 or fewer employees include among others:

  • Businesses; 
  • self-employed individuals; 
  • sole proprietors; and 
  • independent contractors.

An eligible entity may only receive one PPP second draw loan. For loans of $150,000 or less, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits its loan forgiveness application. 

FDL and SDL forgiveness: 

Recipients of both first draw and second draw loans would be eligible for forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply.  

Borrowers should contact their lenders for additional information on the loan forgiveness process.

Forgiveness Application:

There are two loan forgiveness applications, dependent on how much money your practice received:

  1. PPP loans of $50,000 or less - PPP Loan Forgiveness Application Form 3508S
    For this simpler application, fewer calculations and less documentation is required for eligible borrowers. Borrowers who use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process. Read the full instructions here.
  2. PPP loans of more than $50,000 - PPP Loan Forgiveness Application Form 3508
    For this loan application, there are four components: 1) the PPP Loan Forgiveness Calculation Form; 2) PPP Schedule A; 3) the PPP Schedule A Worksheet; and 4) the (optional) PPP Borrower Demographic Information Form. All borrowers must submit (1) and (2) to their lender. Options are available for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles. 
    Flexibility exists to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving the PPP loan. For loans made before June 5, a borrower may elect an eligible period of eight weeks. For all other loans, the eligible period is 24 weeks or until December 31, 2020, whichever comes first. Read the full instructions here.

APMA encourages borrowers to contact their accountants to assist with preparing the appropriate documentation. There is no explicit deadline for submission, PPP loan recipients should contact their lender directly for information on submitting the loan forgiveness application.

Critieria:

  • You must submit a request for loan forgiveness with the lender that is servicing the loan.
  • Include documents that verify the number of full-time equivalent employees and pay rates.
  • Include payments on eligible mortgage, lease, and utility obligations.
  • Lender must make a decision within 60 days.

Forgiveness Amount:

  • The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. At least 60 percent of the funds must be used for payroll costs.
  • Forgiveness will be reduced if full-time headcount is reduced.
  • Forgiveness will be reduced if you decrease salary and wages by more than 25 percent for any employee who made less than $100,000 annualized in 2019.

NOTE: You have until December 31, 2020, to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020. 

The PPP Flexibility Act added additional exemptions to the reduction in the amount of loan forgiveness. Under the new law, the amount of loan forgiveness will not be reduced based on a reduction in the number of full-time equivalent employees if the borrower, in good faith:

  • can document that the borrower is: i) unable to rehire individuals who were employees of the borrower on February 15, 2020; and ii) unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
  • can document an inability to return to the same level of business activity as that which existed prior to February 15, 2020, due to compliance with COVID-related health and safety guidance (e.g., standards for sanitation or social distancing) during the period from March 1, 2020 through December 31, 2020.

Approved Lenders
Currently only community financial institutions (CFIs) are able to process a PPP loan application. CFIs include:

  • Community Financial Development Institution (CDFI)
  • Minority Depository Institution (MDI)
  • Community Development Corporation (CDC)
  • Microlender Intermediary

The SBA and Treasury have indicated that this will open more widely to other banking entities, but hasn't given a specific date.

Loan Terms
You may owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the eight weeks after getting the loan. You will also owe money if you do not maintain your staff and payroll. If any or portion of the loan is not forgiven, these loan terms apply for all borrowers. 

  • 1.0-percent fixed interest rate
  • Loans issued after June 5 have a 5-year maturity time period and loans issued before then are due in two years unless the lender and borrower agree to new terms.
  • Lenders are required to provide complete payment deferment relief for “impacted borrowers” until the loan forgiveness is determined or in ten months if the loan forgiveness application is not submitted within ten months of the loan origination date. This includes interest and fees. Impacted borrowers are presumed to have been impacted adversely by COVID-19, and all recipients are presumed to be “impacted borrowers.”

Changes in Ownership if Owner has received a PPP Loan

On October 2, the SBA also released additional guidance on whether or not the SBA needs to approve any change in ownership. The SBA clarified that for 7(a) loans made under the PPP, no approval is required if the borrower has repaid its PPP loan in full or if it has applied for forgiveness with a final determination on forgiveness having been made (as evidenced by the SBA's payment to the lender) with either the full amount of the loan forgiven or the borrower having repaid any unforgiven amount.

If you have PPP amounts outstanding, it depends on several factors.

  1. SBA approval is not required in the event of (i) transfer (including through merger) of 50 percent or less (when combined with all other transfers occurring since the date of approval of the borrower's PPP loan) of the ownership interests in the borrower, or (ii) the borrower submits a completed forgiveness application to its lender and escrows the full amount of the PPP loan with the lender. In the latter case, the amount escrowed must be used to repay any unforgiven portion of the PPP loan.
  2. SBA approval is not required in the event of (i) transfer of less than 50 percent of the assets of the borrower, or (ii) the borrower submits a completed forgiveness application to its lender and escrows the full amount of the PPP loan with the lender. In the latter case, the amount escrowed must be used to repay any unforgiven portion of the PPP loan.

The borrower must seek approval of the SBA before effectuating any other ownership change, regardless of whether it is an equity or asset sale. As part of the approval process, the borrower must submit certain information to the SBA (through its lender), including the following:

  • A statement of why the borrower is unable to structure the transaction so as to satisfy the requirements for a transfer without SBA approval, including a statement why any required escrow cannot be funded from proceeds of the transaction.
  • The details of the proposed transaction, including a copy of any letter of intent or purchase agreement relating to the transaction.
  • Disclosure of any PPP loans held by the transferee(s) prior to the proposed transaction.
  • A list of all owners of 20% or more of any transferee entity.

The SBA will issue a determination within 60 days of the receipt of a complete request.

Additional Resources from APMA Partners

Paycheck Protection Program (PPP) FAQ

Economic Injury Disaster Loan (EIDL) and Emergency EIDL Loan Advance

Eligibility

EIDLs are available to small businesses, independent contractors, and sole proprietors in declared disaster areas, which now includes all 50 states and territories. To qualify for an EIDL, the applicant must have suffered “substantial economic injury” from COVID-19. Substantial economic injury generally means a decrease in income from operations or working capital with the result that the business is unable to meet its obligations and pay ordinary and necessary operating expenses in the normal course of business.

Loan Amount
Eligible recipients can receive up to $2 million in assistance, which can include a $10,000 Emergency EIDL (cash advance grant). EIDL loans under the CARES Act are based on a company’s actual economic injury determined by the SBA (less any recoveries such as insurance proceeds)

Loan Forgiveness
Unlike PPP, EIDLs generally do not have any loan forgiveness provisions. However, applicants that already applied for an EIDL loan can refinance their EIDL under the PPP. Additionally, the Emergency EIDL loan (next section) of up to $10,000 is not expected to be repaid, even if you are subsequently rejected for an EIDL. 

$10,000 Emergency EIDL (Cash Advance Grant)

  • How do I apply for this grant?
    The SBA has launched a streamlined application process via its website, so small businesses can submit applications for both the EIDL and Emergency EIDL simultaneously. If you had previously submitted an application for an EIDL prior to the emergency loan’s availability, you can still submit an application for the Emergency EIDL.
  • How much?
    Up to $10,000 in a cash advance is available.
  • How quickly can I receive this money?
    The SBA anticipates paying the cash advance within three days of a successful application. 
  • What can I use the emergency EIDL cash advance for?
    The grant can be used to provide paid sick leave to employees; maintain payroll; meet increased production costs due to supply chain disruptions; or pay business obligations, including debts, rent, and mortgage payments.
  • Is the cash advance forgivable?
    This advance is forgivable if it is spent on any of the items listed above. The emergency loan is also forgivable even if the grantee is subsequently denied an EIDL.

Loan Purpose
Proceeds of the overall EIDL may be used for:

  • Payroll and other costs
  • Increased costs due to supply chain interruption
  • Mortgage or lease payments
  • Obligations that cannot be met due to revenue loss and for other uses.

Application Dates
Applications for an EIDL and Emergency EIDL can be submitted from January 31–December 31, 2020. 

Application Procedures
Eligible small businesses can apply for a loan at https://disasterloan.sba.gov/ela. For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or email disastercustomerservice@sba.gov. Eligible businesses should expect a disbursement of monies within five business days of a successful application.

Loan Terms
The interest rate on EIDL loans is 3.75 percent fixed for small businesses and 2.75 percent for nonprofits. The EIDL loans have up to a 30-year term and amortization (determined on a case-by-case basis).

Economic Injury Disaster Loan (EIDL) and Emergency EIDL (Cash Advance) FAQ

Marcum, LLP Articles for Podiatric Practices

The accounting and business advisory firm of Marcum, LLP is providing information to help podiatric practices survive during the pandemic and economic downturn and to start planning for the recovery.

Article 1: Guide to COVID-19 Small Business Loans

Article 2: Accessing Various Forms of Capital for Your Practice

Article 3: Building a Path Forward for Your Podiatry Practice

Article 4: Tools to Help Your Podiatry Practice Survive and Thrive

Additional Assistance and Resources

APMA has compiled resources on other SBA loans, state loans for small businesses, private resources and consumer assistance available to podiatric practices. 

Webinar: How Your Practice Can Survive COVID-19

APMA partnered with Marcum LLP to offer its members a one-hour webinar about recent COVID-19 legislation and resources for you and your practice. Download a copy of the presentation and a copy of the Q&A from the presentation. Marcum LLP provides a detailed guide to small business loans as an update to its How Your Practice Can Survive COVID-19 webinar.

Podcast: Applying for SBA Loans

Disclaimer: This resource is for information purposes only. APMA advises doctors of podiatric medicine to speak with an attorney or financial advisor duly licensed in their jurisdiction.


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